Client Expense/Future Payable

We want to charge the client for an expense that will be on a payable that will not arrive until after billing takes place. So, for example, we get our courier bill at the end of the month, but we want to bill the client now and include the courier charges incurred to date. So I could enter it as an expense recovery, but then how do I account for that charge when the bill comes in and I enter it as a payable and allocate the charges on the bill to the various clients? Version 9.31c, PC Law Pro.

I recommend entering a payable for the vendor and charging it to the client. Then when bill comes in, you just process the payable, or add other charges to the payable as needed. 

Pat - that's what I used to do, but somewhere around the roll out of ver 9, when you try to edit a payable, still unpaid, that has 1) client allocations that have been billed previously, and 2) a payable due date that is later than the date the client allocation was billed, you cannot save the changes to the payable. You'll get an alert message that reads: "The bill date on an allocation is prior to the accounts payable invoice due date." (Most helpful!) Workaround that I've found is to change the payable due date to a date on or before the client's bill invoice date. Unfortunately now the payable due date of the invoice date is no longer the date it is actually due.  This messes up the Payable Listing report a bit - at least for me as I use a cut-off date when the generating the report to exclude vendors/payables that are not due for a longer period of time so now have to mentally track changed payables to identify when they are due.

If someone can come up with another way around this, I'd be most grateful.

John Dorst
Business Manager
Herrig & Vogt, LLP
(916) 960-1000

Lisa,

Not sure if you're just using couriers as an example, but I enter almost ALL courier charges via Expense Recovery, usually at time of billing.  The g/l account that the expense goes to is Courier Recovery, and then I pay the couriers through payables using the Courier Expense g/l. One the trial balance we can see how much we're collecting - exactly the same as photocopy, fax, etc. etc.  We have a government corporation as a client and they do not pay courier charges.  Of course there are exceptions, but most of my payables are not allocated to matters.

Susanne:

Perhaps the effect of the recovery method will vary depending upon your accounting method (cash, accrural). For us, as Modified Cash, recovering a hard cost using Expense Recovery has PCLaw report that cost as a soft cost. Basically, hard costs are taxable income to the partners at the end of the year whereas soft costs are not. I'm working hard to avoid having any unreimbursed hard costs (courier, process service, court reporters, research, document production, etc.) appear at the end of the year as a soft cost. It takes me a couple of days to conduct the end of year review of the report and reallocate misallocated soft costs as hard costs. Being "forced" by PCLaw to do that in some instances is frustrating.

John Dorst
Business Manager
Herrig & Vogt, LLP
(916) 960-1000

John,

I guess it makes a difference what country you're in!! Our tax laws seem to be very different.  Our partners pay tax on their draws, which is their income, and the partnership - the firm itself - does not pay tax at all.  At any rate all I've ever used is accrual accounting.  In our case as a small firm, most of the file disbursements you mention are paid directly from the matter as soon as the invoice comes in, just as court fees and land title fees are. At any rate I hope my answer was of some use to Lisa.

However, if you're entering matter charges as payables and you don't have the bill, wouldn't you just enter a debit or credit invoice to adjust for changes before you run (pay) the payables?   Perhaps there are changes to the program in the newer versions that I'm unfamiliar with.  Our network is not tested by LN and so I can't update at this time.  I'm a long time PCLawPro user - not a CIC, so of course I only know what works for me and my firm.

Cheers